Market Report: Hays revives amid talk of Adecco takeover

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The Independent Online

Speculation about an impending takeover bid for the recruitment specialist Hays was revived on a slow Monday for the stuttering mill. Bid chat has circled the stock for some time and Adecco was being mooted as the predator yesterday. One trader said: "It was natural that these rumours would resurface because the stock has come off a long way from 180p in July. We are not sure if the Adecco story holds any water, mind you." Hays strengthened off the rumours to close 3.75p stronger at 137p.

Top of the leaderboard was Tate & Lyle, which rebounded after its hardcore sell-off on Friday. The sugar producer fell by a quarter after a pretty terrible market update but rallied to regain 9.38 per cent at 440.25. One trader said: "The sell- off was overdone. The market has been waiting for an opportunity to hammer the stock and that was it." Numis supported this point of view, saying most of the bearish news was priced in, putting an "add" rating on the stock. Investec added: "The valuation also ignores the presence of possible significant positive catalysts in the form of senior management change, an accelerated pace of restructuring or even a takeover."

Support from Credit Suisse boosted Kazakhmys by 7 per cent to 1505p. The broker upped its target price to £20 per share, saying: "The market is underestimating how high copper prices could go as Chinese restocking continues and supply remains constrained."

Elsewhere in the sector, AngloAmerican was also a solid performer as it prepares to sell 61 million ordinary shares, almost half its stake, in AngloGold Ashanti. The shares gained 2.16 per cent to 3360p on the news of stock sell-off, which was valued at almost $3bn by the close last week, as investors speculated that AngloAmerican would dispose of all of its holding in the South African group.

The FTSE 100 yo-yoed in early-morning trade, vacillating between almost 50 points down to 33 up. Rumours that Citigroup had cut its third-quarter forecast and trouble at UBS had traders nervous but the index finished up 39.4 points at 6506.2 after a strong opening on Wall Street.

It proved an unhappy anniversary for Northern Rock, which fell to record lows once more as talk of a cut-price bid did the rounds once more. The troubled lender, which marked 10 years as a publicly-listed company yesterday, slumped by a further 26.28 per cent to close at 132.1p.

Investors in cigarette-maker Imperial Tobacco were wheezing as the group's transformational takeover suffered a slight hiccup. The European Commission said yesterday it had extended the deadline of the inquiry into Imperial's takeover of Franco-Spanish rival Altadis, sending the stock down by 1.12 per cent to 2216p.

On the second line, waste management specialist Biffa stormed up after a solid trading update. The group's shares rose by 8.58 per cent to 240.5p after it announced it was more optimistic for its landfill and power generation divisions than expected. However, broker Seymour Pierce cautioned: "The recent problems in the credit market make an early bid for Biffa less likely."

Property, transport and environmental project management consultant WSP Group was up 3.39 per cent to 731.5p after buying two companies – Chas H Sells, a US transport and infrastructure engineer, and CBP Consulting Engineers, a German group.

The worst performer during the morning was UK Commercial Property Trust, which fell by 5.65 per cent after it said its property portfolio had fallen in value since June. It sparked a slight rally but closed down at 80.5p.

That perennial takeover target Quintain Estates sealed an acquisition of its own yesterday with its shares closing 12p lower at 728p as a result. The group, which was a target for HBOS earlier this year, agreed to buy Wembley Retail Park for £85m from a fund managed by Capital & Regional.

Among the small caps, the debt adviser Debtmatters took a heavy pasting from traders after admitting its Individual Voluntary Arrangement business might no longer be able to operate profitably. News that it had scaled back its operations sent its price tumbling 73 per cent to 18.25p. This had a knock-on effect in the sector, with Debt Free Direct falling 29.13 per cent to close at 163p.

Another company which needs resuscitating is Vernalis. The biotechnology group slumped by more than half after the US Food and Drug Administration delayed approval for its new migraine drug. The news, which meant it missed out on a payment of $40m, sent its shares down to 20p.

Beyond the penny stocks, Torotrak was one of the strongest performers outside the FTSE 350. It has signed a licensing deal with Tata Motors of India for Tata to develop and build transmissions for its cars. Torotrak's shares rose by 20.54 per cent to 33.75p.

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